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This week brought some muted but welcome news for borrowers when the Bureau of Labor Statistics released its latest inflation reading, this time for February. The rate dropped to 2.8% in the month, down from 3%. And while that reduction was moderate and still keeps inflation almost a full point above the Federal Reserve’s desired 2% goal, it did snap a four-month streak in which inflation consistently grew.
Inflation, after all, has been a big driver behind higher interest rates on a series of products. Mortgage and mortgage refinance rates have been one of the most impacted, with mortgage rates in recent years hitting their highest point since 2000. While they’ve come down since, they remain elevated, causing economic pain for both homebuyers and homeowners looking to refinance. With millions of Americans tied to mortgage rates under 5% now, it often doesn’t make sense to refinance when a 30-year refinance rate is close to 7%.
Fortunately, there are still viable ways in which homeowners can get equity out of their home without having to refinance. And this spring could be a particularly opportune time to explore them. Below, we’ll break down two critical ways to know now.
Start by seeing how much you could borrow with a home equity loan here.
How to get home equity out of your home without refinancing this spring
The average home equity amount is up 6% and currently sits around $313,000. So there’s plenty to utilize right now. Here’s how to gain access to that sum without having to sacrifice your existing low mortgage rate:
Home equity lines of credit (HELOCs)
A HELOC operates the same way a credit card does, functioning as a revolving line of credit. And you’ll only have to pay interest on the amount utilized, not the full line of credit you’ve been approved for. Plus, if you use it for qualifying home repairs and renovations, you may be able to deduct the interest paid on the HELOC from your taxes for the year or years in which it was utilized.
This spring is a great time to open a HELOC. Rates fell on the product in 2024, then hit an 18-month low in January, a two-year low in February, and continued that decline this March, where they currently sit at around 8%. With a variable interest rate subject to change monthly for borrowers, this product could become even cheaper if inflation continues its downward trend. Plus, borrowers won’t need to refinance as the rates on the product will change independently, setting homeowners up to make even cheaper payments in the future.
See what HELOC interest rate you’d qualify for here.
Home equity loans
Home equity loans function similarly to HELOCs, but the funds are provided in one single sum versus the revolving line of credit. They also have higher interest rates than HELOCs do at the moment, with the average around 8.40%. Still, that home equity loan rate is fixed, unlike the variable rate the HELOC comes with. So the slight differential may be worth it if you’re worried about interest rates rising again in the future. Home equity loans also have the same tax advantages as HELOCs do, and you can refinance the loan in the future should rates fall materially lower than that currently available 8.40%.
The bottom line
Both HELOCs and home equity loans offer homeowners reasonable and cost-effective ways to access their home equity this spring without having to refinance. Just be sure to calculate your potential repayments as accurately as possible (which can be difficult to do with a variable HELOC rate). Fail to repay your loan or HELOC as agreed upon and you could risk losing your home to the lender. So explore both options carefully before formally applying.
Speak to a home equity lender here to learn more.